The Product: Sorensen's
product, the Java Jacket, is a patented, honeycombed insulating
sleeve that slides over a paper cup filled with a hot beverage.
Java Jackets are used in coffeehouses, specialty stores and
convenience stores nationwide. Sorensen's was the first
insulating jacket on the market, and his first customer was Coffee
People, a small chain of coffee shops in Portland, Oregon. Though
Starbucks uses another type of insulating sleeve made by a
competitor, Sorensen's Java Jacket continues to dominate the
market.

Start-Up: $15,000 in 1993,
which Sorensen used for product development and a production run of
more than 100,000 units

Sales: $12 million to $15
million projected for 2003

The Challenge: Establishing
your innovative product in the market and not backing down when
large and established competitors release their own variations of
your product

Developing an innovative product is every inventor's dream.
Finding success selling that product is even better. But this kind
of success often breeds emulation-from large corporations, no less.
When you're still growing your business, how do you stand apart
from the knockoffs released by big corporations? Is it possible to
become-and stay-the market leader? The answer is a resounding
"yes." Just ask Sorensen. He knows firsthand how to fight
this fight, and here's what he's done to protect his place
in the market:

Steps to
Success1. Find an advantage people will
notice. Sorensen first got his idea after spilling a hot
cup of coffee. The cup was handed to him with a napkin around it,
but it slipped out of his hand. He realized a cardboard or paper
sleeve that could easily slide around the cup would be a great
idea, but his unique advantage was in the design. "I went
around Portland to a dozen paper suppliers to see what they
carried," he says. "I found a supplier who had embossed
paper [with] a honeycombed look to it. It had a quality image, and
it was better than a simple sleeve."

2. Create a catchy name that sticks in
customers' minds. Java Jacket is a perfect name. It
describes what the product does, and it's a name customers
remember. "Java Jacket has such a dominating market awareness
that sometimes people who [meant] to call the competitor call us
instead," Sorensen says. "The trademarked Java Jacket
name is worth more than our patents."

3. Find a fast way to reach
customers. In 1993, while waiting in his first
customer's office for a check, Sorensen saw a trade magazine,
Fresh Cup, on a table. "It listed [an upcoming] trade
show in Chicago, and I called up and took a booth." At the
show, he met hundreds of potential customers. "It was the most
exciting three days I've experienced in business," he
recalls. "I walked away with orders from more than 100 stores,
and I had 200 customers by the end of 1993." When you
don't have a lot of money, you need a way to get in front of
customers at a minimum cost. Trade shows can be a great way to do
just that.

4. Keep overhead low. Things
can turn against you when you compete with a big company, so
minimize your investment and operating costs in order to quickly
downsize if needed. With the Java Jacket, Sorensen says, "We
outsource all our production, and we only have six employees."
That's low overhead when you're turning more than $12
million in sales.

5. Promote your brand identity
relentlessly. "We attend eight to 10 trade shows
per year, and we advertise regularly in all the industry trade
magazines, including Fresh Cup, Specialty Coffee Retailer and
the Tea and Coffee Trade Journal," Sorensen says. He wants
the Java Jacket name in front of prospects all the time.

6. Don't ignore
opportunities. A growing company needs to do whatever it
can to prevent a competitor from getting a foothold in a new
market. In the past few years, many convenience stores started
offering specialty coffees-and Java Jacket made sure to be right
there. "Much of our growth has come from convenience
stores," he says. "They like the jackets because it stops
people from double-cupping. A cup costs 6 cents vs. 3.5 cents for a
Java Jacket." Convenience stores weren't Sorensen's
original market, but he went after them anyway to stop competitors
from gaining an easy market-entry point.

SHOW OFF

The
Electronic Retailing Association (ERA) will host its 13th Annual
ERA Conference and Exposition, a direct-response TV and Internet
marketing convention, September 14 to 17 in Las Vegas. If you think
your idea could sell on TV, this is your chance to meet producers,
marketers and back-end suppliers (companies that take and fulfill
orders) all in one place. The convention also features booths for
companies looking for new products to promote, and many offer some
kind of royalty or profit-sharing arrangement. For inventors who
want premium exposure, the convention has a separate new product
showcase where you can display your product to all attendees. Log
on to the Web site (www.retailing.org) for more
details.

Lessons Learned

1. Don't think all the advantages
lie with the big guys. While it's true growing
businesses have trouble breaking into a market established by big
companies, they have plenty of breaks if they can get into a market
first. Customers like supporting the small company that created the
innovation, and they'll support that company as long as its
pricing and delivery are right.

2. Drive customers to
distributors. At one time, before he added distributors,
Sorensen had more than 5,000 customers. That's too many
customers for one small company to support. When customers call you
direct, find out if their distributor will furnish the product to
them. Tell customers that ordering will be easier if their
distributor will carry a product. Distributors will add a product
if they get enough requests for it. While distributors cut into
your profit margin, they make up for it by stocking and delivering
your product, and they can also help you rapidly expand your
market.

3. Don't waver on
supply. Customers will stay even if you're
small-unless they fear you won't be able to supply them.
That's when a big competitor has the chance to step in. If you
can't afford to support rapidly increasing sales, make a deal
with a manufacturer, seek a loan from a bank, or take on a partner
to be sure you can ship enough products to keep customers
happy.

4. Keep your visibility
high. Attend trade shows, trade association meetings and
industry conferences, and maintain a prominent advertising presence
in trade journals. Buyers are concerned that a small supplier may
run out of funds and go out of business, so it's important to
maintain your visibility. If you drop out of sight, some of your
customers might think this is a sign you're in financial
trouble.

5. Be vigilant about patent and
trademark violations. When you're sitting on a hot
new market, competitors will test to see how vigorously you'll
defend your intellectual property. They might try to test-market a
similar idea, or they might try to market another product with a
name similar to yours. A quick response from your patent attorney
is enough to stop many companies. Your best chance at minimizing
your legal fees is to stop these companies before they get
started.

PATENT MATTERS

A patent
is a useful tool for inventors, but as you start to develop your
businesses, you need to look at the role of patents in your overall
strategy for growing the business and increasing profitability. An
intriguing new book, Essentials of Patents (John Wiley &
Sons) by Andy Gibbs and Bob DeMatteis, takes on patents from this
perspective, detailing how a business can benefit from creating a
"patent consciousness" among its management and
employees. The book includes information on some of the new patent
changes in 2003 as well as a comprehensive look at how companies
should manage their patents.

Don Debelak is the author of Entrepreneur Magazine's
Start-Up Guide #1813, Bringing Your Product to Market. Write to
him at dondebelak34@msn.com.

Creating a MAP will take no more than an hour of your time every month and will keep the lines of communication open, ensuring relationships with investors remain strong, and ultimately helping early-stage startups succeed.